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the coming economic doom

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posted on Jan, 20 2008 @ 06:49 AM
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ok so,
im reading all of this economic depression doom and gloom stuff....


here's the thing,
econ is not my strong suit. im a 22 year old college student, and i live in a dorm during the school year and with my parents in the summer. so basically i havent been out on my own yet. ive been on this site for years..so most of you know that about me already


so all of this talk about the stock market..percentages....muni bonds yada yada..has me completely lost as to the actual impact of this.

i get the the whole scenario of the dollar dropping and what that means..that is simple enough.

but since i dont understand most of this because i havent been a participant yet..im not grasping how this is actually going to effect me. can someone please explain how all of this is going to effect the average citizen like ME? what will be visible changes that i will see? what aspects of my life will actually change?

Thanks a bunch!

Digitalgrl

[edit on 10/01/2004 by DigitalGrl]




posted on Jan, 20 2008 @ 07:20 AM
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well, the biggest impact I see that may be coming your way would involve your student loans if you are using them to help fund you education.

www.pbs.org...

student loans might become a tad bit more costly, although they are saying, that there won't be a problem getting them. At least in this article I've posted. Others say that they might decrease.

I'm a 50 year old who prints the little banners and pennants for the college sports teams, and I am waiting to see if our business will drop...more than what would be in it's normal cycle.

my best advice to you would be that you are still quite young, whatever comes our way, you'll out last it. avoid debt as much as you can, save your pennies, and try to get yourself ready for one of the biggest selloffs in american history!
whenever the economy tanks, there's money to be made, if one has money to make the money!



posted on Jan, 20 2008 @ 08:42 PM
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great topic and good idea to bring this to a level that is more realistic for many of us

some changes will be difficulty in getting certain lines of credit such as loans for automobile's , home loans, and the loans (if you can get them) will be at higher intrest rates. Very Good credit will become very important. it will propably be a good idea to go ahead and hold off untill banks can hopefully re capitalize and lending conditons will eventually become more favorable next year.

if you already own a home, you may watch as your remaining mortgage payment becomes higher than the actual value of your home ("becoming "upside down").

Also Higher Unemployment and dwindling job opportunity's will likely become reality. Company and Business Earnings are lowering and the biggest expense for many company's is payroll so you cut some employee's alot of times in these situations. Retailers's and Resteraunts and Spa's will suffer from lower "store traffic" as extra spendable income decreases (amidst higher cost's of living, and lower investment values) so some will go out of business. Get ready to see many more open spots in strip malls and "for rent" signs. all income levels will be effected.

IMO the thing to watch out for is Unemployment getting out of control.

Also if you are an investor i would watch out for the markets of emerging economy's as well as those like Russia, India, China because there are asset bubbles here that will likely be punctured (this may eventually help international money flows back into the u.s markets toward the end of the year or by 09 IMO but the stocks are goinging lower first, but besides that their is tons of uncertainty here.

Also as far as the dollar falling (lately it has stabalized) often when it falls prices for imports will rise (unless other country's currency's are being depressed in tandem) these imports include the goods you buy at the toy store as well as the department store and especially the grocery store (although this is also due to supply constraints and ethanol subsidies)

Oh ya state budget's will be cut since they lost alot in the markets, so some parks may be closed, educational activities and extra's will be cut, health care cost's will rise

and you may notice a lot of wealthy people will be in real sour moods.


[edit on 20-1-2008 by cpdaman]



posted on Jan, 20 2008 @ 10:28 PM
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Stock up on ammo, canned food and water. Don't buy anything on credit this year...




posted on Jan, 21 2008 @ 12:19 PM
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Thankfully, i am not a credit abuser. (i have one credit card and pay it off completely when the bill comes in every month). i have no student loans, i work at a hospital while i go to college. most of you know im majoring in history and secondary ed and minoring in philosophy so obviously my profession is in teaching...which seems to be a pretty safe field atm. ill be out of college this time next year. and my fiance is a police officer soon to be detective which im sure that job will be safe as well. however we are getting married july 24th of 2009, we dont own a home yet for obvious reasons...mainly because we dont believe in living to gether before marriage but also because i live in a dorm at college. so im concerned about buying our first home in the middle of all of this. i checked my fica score the other day and it is 780 which i guess is great and he said his is in the 700's as well. so from your opinon is that a good position to be in credit wise when we decide to purchase a home?

Thanks a bunch!
Digitalgrl

[edit on 10/01/2004 by DigitalGrl]



posted on Jan, 21 2008 @ 12:20 PM
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reply to post by dawnstar
 




nope thank goodness

my parents are upper middle class. mom is a teacher dad has his masters in computer science and is a vp of a corporation in chicago. so thankfully they are paying for my education.



posted on Jan, 21 2008 @ 09:37 PM
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reply to post by DigitalGrl
 


Actually, with good credit scores and a down payment, you could probably pick up a good deal on a foreclosure.
The trick is when you are trying to sell and purchase another home. Cuz it's a buyer's market right now, as long as you can get a mortgage.


If you want a crash course in global economics, get a hold of Commanding Heights, a PBS series available on DVD.
www.netflix.com...



posted on Jan, 21 2008 @ 11:00 PM
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Credit abuse is a major reason we are in this situation. The banks are not all to blame....I'll use this example of my uncle because it fits what I think many Americans do, not all. My uncle can not get credit at all anymore...why you ask? Because he literally has a $1 million dollars worth of debt, probably more, but I know a $1 mil for sure....now, my grandmother decided, hey, it'll be a good idea to let him use my card. Instead he charged it up twice, putting everything on it from Taco Bell, yes Taco Bell, to groceries and lots of fast food restaurants.

Heres the problem, if he doesn't pays it back, it's ok because its not his card, my grandma had to pay, which she did...hope she learned her lesson but thats a different story. Anyways, to get on with it, I think many people do what he does. Case in point, all these foreclosures. I know my uncles house is not worth now what he paid for it, so if the mortgage company forecloses on him, what do they gain? Nothing, they take a loss because they can't get what it was worth.

A lot of people think credit is cash, but it's not and those finance charges will keep you paying it off forever. 18% thats ridiculous, and, thats not the bad part, it can go as high as 31%. I'm looking at my cards now and that's basically what they say give or take a few percentage points. So people go out and spend, spend, spend and they can't pay, a major reason the country is in this mess. Now, the lenders are to blame too, they did give out quite a bit of bad loans, which is an understatement. I know it was easier to get a house than an appartment before this crisis hit. The thing is, the Fed and now Bush are going to add another bandaid or crutch to it and things will get better for a while, but it's not really fixed.

I'm only 23 so I'm not much older than you DigitalGrl, so I know how it is to be young and worry about credit ratings, the value of the dollar, and things of that nature. My cards are always paid off, and if I don't have the money, I don't use the card to get something, it's just not worth the risk. I know some people will pay the minimum, but that will come back to get you. Right now, if I had the cash, I could get a house in my area for probably less than 100K and I'm talking 3-4 bedrooms and something that will actually resemble a lawn, but this is Texas so prices are cheaper.

If you have the cash, now is a great time to be buying into the market. Most people will tell yo otherwise because they're scared, but, there are a lot of "sales" right now of good companies that aren't even related to the credit crisis that are getting hurt. My investments as of today look like crap; my stock return is -27% and my overall return is -18%, but, I'm not selling, and I'm not too worried, even if it is pissing me off as I watch my good investments bleed. If I had the money to be buying, I guarantee you I would be.



posted on Jan, 22 2008 @ 03:10 AM
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Originally posted by ChrisJr03
Credit abuse is a major reason we are in this situation. The banks are not all to blame....


Excuse me... *Who* exactly financed the credit? Who encouraged us to take more, much more than we could ever safely have access to. Do you know that some animals will eat themselves to death on certain foods? Farmers have to be aware of this if they want to keep horses around. Banks also have to be aware of this if they would like to keep a "healthy" credit business going.

Instead they decided to go the shooting star route, which has brought this all down on their heads. So, I say, just desserts.

Yes, the banks may not be to "blame", but they are what caused it, end of story.



posted on Jan, 22 2008 @ 04:56 AM
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ever wonder, maybe it was this free and easy credit...for consumers, but also for businesses, that has kept the economy going this far??
in which case, this blame game is irrelevant, since if we the people weren't out buying houses we couldn't afford then all those people working in the real estate and building houses and such would have been laid off a long time ago. if we hadn't been out there spending money we didn't have, this economy would have tanked years ago!!



posted on Jan, 22 2008 @ 05:00 AM
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reply to post by Quazga
 


Wrong...

Consumers are responsible for their own actions, including obtaining and using credit...

Any suggestion otherwise smells a lot like deserting ones own obligations to one's self...

That is, you decided what you do and when you do it...

To blame banks for the spiral in consumer credit is absurd....

Individuals are responsible for their own situations with regard to credit (any many things in life), period...

Peace

EDIT -- to add

BTW, Dawn...I agree with you 100%...nice post


[edit on 22-1-2008 by Rilence]



posted on Jan, 22 2008 @ 05:24 AM
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reply to post by Rilence
 


I can't really agree here. You are correct that the individual consumer is responisble for over extending themselves. However, I don't think you can let the banks off the hook for how it happened.

I think they set up systems that they knew full well would trap people into over extending themselves. They tried to capitalize on the exploitation of the ignorant consumers and it backfired.

In my opinion, both parties are responsible for this mess.



posted on Jan, 22 2008 @ 05:32 AM
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reply to post by Karlhungis
 


Fair enough Karl, nothing wrong with agreeing to disagree


Sure you can look at it from the point of view that "ignorant" consumers were duped and so on...

But IMHO, if consumers are ignorant, that's their fault...Nothing wrong with doing some homework and not doing things on impulse...Nothing wrong with buying a $250K house instead of a $600K job either...

I have little sympathy for those affected by the current credit situation world wide...

Caveat Emptor, as always...

Peace



posted on Jan, 22 2008 @ 05:39 AM
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Originally posted by Rilence


But IMHO, if consumers are ignorant, that's their fault...Nothing wrong with doing some homework and not doing things on impulse...Nothing wrong with buying a $250K house instead of a $600K job either...

I have little sympathy for those affected by the current credit situation world wide...

Caveat Emptor, as always...

Peace


Fair point, I guess, but realistically, if you offer people the chance to borrow huge amounts of money, if indeed you advertise that chance as a gleamingly brilliant financial product, people are going to buy that product. In the UK, the concept of home owning is incredibly deeply embedded in the national psyche - "an Englishman's home is his castle", and so on. But the price of owning property far exceeds the majority of people's ability to afford it.

The alternative is renting, but the rental market is legally so heavily weighted in favour of landlords, and so against tenants, that the rental experience can be pretty horrific - particularly in the city.

So the public are torn between safe, secure housing they cannot afford, and the opposite in the rental market which they cannot tolerate.

Add all those things together and you get a credit crisis, but in my view the consumer is not to blame for it.

Attributing blame is in some ways less constructive than attributing responsibility. People will always make mistakes - but ought banks be permitted in future to lend at such an absurdly irresponsible rate?

LW



posted on Jan, 22 2008 @ 05:43 AM
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reply to post by Rilence
 


I definitely understand where you are coming from. I think what the lenders did was legal, but I am just not a big fan of exploiting people.

Americans have a horrible track record of financial responsibility. The lenders knew this and exploited it. In my mind it is a lot like dealing drugs. First one is free.... then they are hooked and you have a customer for life. Same thing applies with the teaser rates. Get a big fancy house with a low payment.... then when the payment increases, they owe you for life.

Again, not necessarily illegal... but morally irresponsible. They loaned this money to people knowing full well that the people were spending beyond their means. Which to me is just as irresponsible as the people who are borrowing more than they should. Would you loan money to someone if you knew full well that in a few years time, they would have to choose between paying you back or feeding their family? I wouldn't.



posted on Jan, 22 2008 @ 05:47 AM
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reply to post by LoneWeasel
 


I hear ya, LW....Its the same here in Australia...The great Aussie dream to own a home, have 2.3 kids or whatever, etc....

From my own POV, I prefer renting and investing at this stage of my life, but its horses for courses I guess...

I believe both consumers and lenders are to blame for it...Consumers for lacking willpower and lenders because regulating authorities allow them to lend $10 or so for every $1 they have on deposit...

This needs to change, and soon...There needs to be much greater liquidity requirements for lenders world wide, thus raising interest rates higher, and borrowing less desirable to many consumers...

Agreed, blame is pointless at this stage...Action is required, which is why I suggest tightening liquidity requirement for lenders...

That's the best I can come up with at this point...



posted on Jan, 22 2008 @ 05:55 AM
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reply to post by Karlhungis
 


From a moral point of view Karl (and LW too
I could not agree more...I guess I'm just looking at this situation at the moment from an economic/financial viewpoint from the big picture level...

I haven't much considered the moral side of things until you just bought it up, with which I agree 100%

I guess now that its happened, what do we do about it all ? *sighs*

Peace

FYI -- Dow Futures have staged a great recovery in the last few hrs....They were as much as 620 pts down, and are now 450 pts down...Europe has done amazingly well today thus far...London and Paris are up, Frankfurt was over 300 pts down at the open, and is only 33 pts down coming up to 1pm....

Remarkable !!

Wall Street might not as bad as people think, perhaps Asia copped the brunt of it all by the looks of things....

[edit on 22-1-2008 by Rilence]



posted on Jan, 22 2008 @ 06:08 AM
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reply to post by Rilence
 


Thanks for the update on the markets. I was pretty convinced that we were facing a major crash today. Maybe it won't be as bad after all.

I wish I knew what we could do about the situation. As a person, I focus way too much on the negative side of things and it really does blind me to seeing the positive. Currently in this financial debacle, I am completely blind to seeing any possible solution. In my eyes all roads are heading to economic collapse.

I wish I could see a better way out of this but I simply can't. I hope I am wrong. Good thing though is that nothing is usually as bad as I make it out to be.

I just wish there was some solid leadership somewhere that would step up and guide us out of this. It is like the entire world doesn't want to face the reality of the situation. Whenever anyone brings up the word recession, the market drops. So people don't say it. Even though everyone in the world knows that it is happening already.

If people can't even be honest about the situation we are in, how in the world will we ever come up with a solution to get out of it. It is this resistance to addressing the problem that makes me believe that it is a pretty serious situation.



posted on Jan, 22 2008 @ 06:22 AM
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reply to post by Karlhungis
 


NP Karl
Yeah,earlier on it was looking like -600 pts+, maybe it might be like -300 pts or so...Here's hoping....Then again, anything could happen...But slight pluses in Europe will help Wall St a lot...Let's hope the Europeans can keep it together for the rest of the day...

I'm not entirely sure we're looking at economic collapse right now, mate...Sure there are a ton of naysayers on here...

But you have to look at it realistically...Markets worldwide have fallen 20% in short order, the US has a massive budget/trade deficit...

However, until companies start to report poor 4th quarter earnings in the next few weeks, talk of a meltdown are premature, IMO...

Now, if company earnings disappoint in the 4th Q, and some companies also issue earnings downgrade for 1st Q, then we have a whole new ballgame...

Fundamentally, outside the US, the world economy looks in reasonable shape, when it comes to growth, company earnings, unemployment, and so on...

Some central banks have had the foresight to raise interest rates in the last 12 mths in order to keep inflation in check...

Unfortunately in the US, the Fed has chosen to bail out the bankers yet again at the expense of longer term economic pain for the consumer...

That is one thing about the US Fed I have not been able to fathom to this day


With regard to what you said about honesty, Karl...You are right on the money...None of these financial institutions will come clean as to how much in the poo they are, and what they plan to do about it...Its all hush hush, which reduces confidence in markets even more...

It is POTENTIALLY a massively serious situation....I guess a couple things will happen :

1) Things will go south very quickly
2) The Fed will apply all sorts of band aids, things will be ok for a bit, then go belly up in a year or so
3)Perhaps financial institutions will come clean as to who owns what, how much it is NOW worth, and who owes who what....

If number 3 comes to pass, perhaps we can all get out of this not too worse for wear...

We can only hope

Peace



posted on Jan, 22 2008 @ 06:26 AM
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"and some companies also issue earnings downgrade for 1st Q, then we have a whole new ballgame"

My own company got abused for forecasting a lower Q1 due to a weakening global economy and possible US recession. I think that many companies are going to echo the same statement. So I think your whole new ballgame is going to be played sooner, rather than later.

In regards to your #3, I just don't see that type of honesty happening in business or politics anymore. Again, I am being negative here but I just don't think that one will happen.






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